Learn from Fast Growing 7-8 Figure Online Retailers and eCommerce Experts

EPISODE 108 46 mins

Is DropShipping a Viable Model for Scale?

Posted on 6th November 2017 , by Kunle Campbell

About the guests

Tomas Slimas

Kunle Campbell

Tomas Slimas is a successful drop shipping e-commerce entrepreneur and co-founder of Oberlo. Oberlo is a platform that helps e-commerce merchants find products to sell.

The mention of ‘dropshipping’ often denotes either poor ecommerce customer experience and lack of supply chain control or some ‘guru’ trying to sell online courses on how to start an ecommerce business.
A search on YouTube for ‘ecommerce’ returns a tonne of results related to dropshipping as a means to escape the 9-5 and upsells to online courses.

My take has been and still is, a business with poor customer experience is impossible to profitably scale, and so dropshipping as a viable ecommerce model was really off my radar. But more recently I was hired to carry out due-diligence on a drop ship business ecommerce brand with monthly revenues of $250,000+ and came across another with monthly revenues of $500,000. This is when dropshipping as a business model started to get my attention.

Don’t get me wrong, there is a LOT of crap out there. Basically, most dropshipping is the scrapings at bottom of the ecommerce pot. The dropshipping sites I mentioned above and all of the dropshipping sites I see that seem to be doing well revenue-wise come across to shoppers as established brands.

I am also seeing a lot of innovation in conversion rate optimisation with dropshippers because they really are front-end marketing businesses that need to prop up the perceived value of products they have little or no control of actually producing.

Tomas Slimas is a successful and retired dropshipping ecommerce entrepreneur who generated revenues of $3 million/year from his dropship site before he co-founded Oberlo, a dropship app that helps Shopify stores find products to sell.

I tracked him and got him on the show to discuss the viability of dropshipping as a scalable ecommerce model in 2017 and beyond.

This is a really interesting conversation. You should still listen to it if you are an established merchant, as you should consider latching dropshipping for product catlog expansion.

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Oberlo’s backstory

They got into dropshipping in 2014. Tomas and his brother had been involved in other e-commerce businesses but unsuccessful. Tomas also had a local bookstore that was small and hard to scale and at the tune did not have any marketing experience.

He found out about dropshipping and called his brother to discuss the business. Within the first year, they had made over $3 million in sales. They later sold the business to their partners in China.

Watch the interview:

Tomas’ brother’s name is Andrew. He owns a web development agency. He was the manager and Tomas handled eCommerce and marketing. There eventually became a 5 co-founder business upon launch; and were staff with a designer, backend and frontend web developers who they worked with for several years.

Shopify and where they see themselves now

It happened in April 2017. They are still the same company and so far, the partnership with Shopify is going on well.

The State of Dropshipping in 2017

There are some suppliers that are making a fortune from dropshipping while others are not. Most dropshipping companies are on Shopify because it is highly scalable which makes it the preferred platform. Dropshipping involves a lot of product testing, advertising, trying different products and staying ahead of the competition.

Thoughts On Other Dropshipping Platforms

Shopify is an easy to use platform. It is known by most people and is easy to set up. There are many platforms available for dropshipping but so far, Shopify has the best tools. Using Shopify makes you think less about technology and more about marketing.

Using Shopify makes you think less about technology and more about marketing.

Dropshipping became a trend since it was easy to launch a business. There are minimal entry barriers since it is about helping people find products. We started with Shopify from the beginning because it is the best platform to scale a dropship business.

Traditional eCommerce vs Dropshipping

Product pages are the most important in eCommerce stores. A lot of successful merchants focus on their product landing pages more than any other page. To drive a customer to the product page, you need to get a niche product that will sell in the market you are in. The product should be attractive.

It is advisable to run fully cataloged stores and invest in marketing.  Even though you would use few products to market the store, it would be better than simply having two or three products in the store which is a mistake most beginners make.

Habits of Successful Dropshippers

Successful dropshippers focus on marketing. They know that marketing is the most important aspect when it comes to dropshipping. For you to stay on top of everything that happens, you need to pay attention to what is going on online. You can learn a lot from online platforms like Facebook when it comes to products.

Successful entrepreneurs also make general stores that are more flexible and do not limit themselves to one product.

Most dropshippers are using Facebook advertising.

Successful entrepreneurs also make general stores that are more flexible and do not limit themselves to one product.

Thoughts on Margins and Pricing

  • Every time you think about pricing a product, you need to think about if you would buy it at that price.
  • You need to see if you feel comfortable buying that product for that price.
  • You also need to consider marketing costs that are necessary to drive traffic to the store.
  • You need to get products that sell.
  • The global conversion rate is 2% which you can use to determine how you will price your product.

How to Add Dropshipping to Facebook

Successful merchants will find ways to balance Facebook marketing and other forms of marketing and use the platform to scale their sales.

Thoughts on Alibaba and Amazon

Aliexpress belongs to Alibaba and 92% of revenue comes from Chinese sales on Taobao and Tmall. Amazon and Aliexpress are not in competition with dropshippers. They are both amazing companies and you find one popular in every part of the world. Dropshipping uses a different strategy which is why they do not rely on SEO like the two.

Lightning Round

How do you hire people?

I look for people who are engaged, want to have an impact, and really care about marketing and dropshipping.

What are your 3 indispensable tools?

Slack, e-mail, and Google products

What has been your ‘best’ mistake to date? i.e. a setback that has given you the biggest feedback

Not putting the best people where they are needed. I learned that the most important tasks need to be handled by the best people to ensure success.

What one-piece of advice can you give to listeners keen on accelerating the growth of the dropship business?

If you are hungry for success, you can make it if you are committed.

If you could choose a single book or resource that has made the highest impact on how you view building a business and growth which would it be?

The book: Talent is Overrated.


06.42   Background behind Oberlo
12.15   Shopify and where they see themselves now.
13.25   The state of dropshipping in 2017
16.23   Thoughts on other platforms
20.45   Traditional looking e-commerce business vs. dropship model
24.15   Habits of successful dropshippers
28.36   Thoughts on margins and pricing
31.30   How to add dropshipping to facebook
39.06   Thoughts on Alibaba and Amazon
44.05   Lightning round

About the host:

Kunle Campbell

An ecommerce advisor to ambitious, agile online retailers and funded ecommerce startups seeking exponentially sales growth through scalable customer acquisition, retention, conversion optimisation, product/market fit optimisation and customer referrals.

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